Cigar News

Today, the cigar industry took a crushing blow when United States District Court Judge for the District of Columbia Amit P. Mehta denied a Motion for Partial Summary Injunction filed by the three trade associations (Cigar Association of America – CAA, Cigar Rights of America – CRA, and the International Pipe and Cigar Retailers – IPCPR) in the legal challenge against the U.S. Food and Drug Administration (FDA). As a result of this ruling, warning label requirements and user fee rules are upheld as documented in the Deeming Regulations.

The pipe industry had a small victory in that the judge ruled that retailers who blend pipe tobacco in-store are not considered manufacturers.

The Deeming Rule’s health warning requirements do not violate the TCA (Tobacco Control Act) the APA (Administrative Procedure Act) and do not violate the First Amendment.

The User Fee Rule was upheld in its entirety.

The process by which the agency designated tobacco retailers who blend pipe tobacco in-store as subject to the requirements of manufacturers violates the APA. The court remands this issue to the agency for further proceedings consistent with this Memorandum Opinion.

The agency’s designation of pipes as “components” of a tobacco product does not violate the APA.

Warning Label Requirements are set to go into effect on August 10, 2018. The Warning Label battle was a central part of the lawsuit against the FDA and was one the cigar industry was optimistic of a Court ruling in their favor. The Deeming Regulations now impose a series of rotating warning labels that must be applied to cigar boxes. The labels take up approximately 30% of the space on the box.

While the Court upheld the regulations put in place by the FDA, Mehta did admonish the FDA for forcing the cigar industry to conform to requirements that might change. Last year, Dr. Scott Gottlieb announced plans to re-open the question of regulating premium cigars. A series of Advanced Notice of Public Rule Making (ANPRM) have been issued to solicit public comment on the topics. Basically, the judge said the FDA didn’t impose unlawful requirements, but that the FDA could have handled things better.

Although the court holds that the Deeming Rule’s health warning mandates do not violate the APA, the TCA, or the First Amendment, the court cannot let pass without comment what it “deems” to be a grossly unfair exercise of agency authority. The health warning requirements have an effective date of August 10, 2018. In the lead up to that date, the cigar industry has expended millions of dollars in designing and creating new, conforming packaging—a fact that the FDA does not contest. However, months before the effective date’s arrival, the FDA issued an ANPRM, “seeking comments, data, results or other information that may inform regulatory actions FDA might take with respect to premium cigars.” 83 Fed. Reg. at 12,901. Some of the information the ANPRM seeks directly concerns the health warnings mandate. For example, the ANPRM asks for “[s]tudies or information on the required warning statements .. which will be required to appear on cigar packaging and advertising in the near future.” Id. at 12,904. The agency also seeks studies or information regarding “consumer perceptions of the health risks of premium cigars when compared to other tobacco products, including cigars,” and “consumer perceptions of the addictiveness of premium cigars, especially compared and contrasted with perceptions for other cigars.” Id. In total, the ANPRM seeks no less than two dozen categories of comments, data, or other information concerning the definition, usage patterns, and public health implications of premium cigars. The sheer breadth of the ANPRM begs the obvious question: Might the FDA in the near future do away with the health warning requirements for premium cigars? And yet another: Why is the agency insisting that the premium cigar industry expend millions of dollars to conform to regulatory mandates that might be rescinded only months after their effective date? The FDA provides no satisfactory response to either question. Whatever the answers, one thing is certain: Requiring the premium cigar industry to incur substantial compliance costs while the agency comprehensively reassesses the wisdom of regulation, before the warnings requirements go into effect, smacks of basic unfairness. In the court’s view, the prudent course would be for FDA to stay the warnings requirement as to premium cigars.

The court’s displeasure with the FDA’s handling of the status of premium cigars, no doubt, provides little consolation to the industry. But the court can do no more. Its hands are tied by both the law and the posture of the case.

Over the past few weeks, the larger cigar companies were introducing packaging with the new warning labels. This had been seen on products by General Cigar (CAO) and Drew Estate. Time will tell whether the judge’s admonishment of the FDA will set the stage for another legal challenge.

The ruling also requested a joint status by the plaintiff and defendant advising the court on how to proceed. This is expected Tuesday, June 11th.

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